The Federal Reserve is the central bank of the United States. Congress gave it a dual mandate: price stability and maximum employment.
Its main policy tool is the federal funds rate target, set by the Federal Open Market Committee (FOMC), which meets eight times a year.
Because Fed decisions influence borrowing costs across the economy, markets worldwide — including gold — watch every meeting closely.
Key definitions
- Federal Funds Rate
- The target rate for overnight lending between banks; a benchmark for many other rates.
- FOMC
- The Fed committee that votes on monetary policy.
- Basis point
- One hundredth of a percentage point (0.01%). 25 bp = 0.25%.
Key takeaways
- Eight scheduled meetings a year
- Decisions: hike, cut or hold
- Guidance about the future can matter as much as the decision itself